MR 2018

62

Copenhagen Property Market Report 2018

Infrastructure: Copenhagen Airport is expanding and it recently cut airline taxes. This means more flight routes, more passengers and more affordable fares. Furthermore, Copenhagen benefits from efficient infrastructure, including the Copenhagen Metro. City brand: Known as the capital of the country inhabited by the happiest people in the world, Copenhagen has great tourist appeal. In addition, Danish culture, especially novels and films (Nordic noir) have served to put Denmark and Copenhagen on the map. Similarly, Copenhagen’s superb culinary scene is attracting people from all over the world.

USA accounting for highest bednight growth

9.44%

USA

8.87%

Great Britain

7.56%

Denmark

Safety: So far, Copenhagen has not been the target of any large-scale terrorist attacks and crime rates are extremely low.

6.38%

Italy

Framework conditions: Some European cities, like Amsterdam and Barcelona, are flooded by tourists and their inhabitants have therefore started to question and oppose tourism growth. This has prompted politically motivated restrictions on hotel newbuilding. Emerging markets: Today, China is probably the best example, but India and several South-American countries may also contribute to future growth in leisure-related demand. Although hotel operators have competition concerns over e.g. Airbnb and the effects of online travel agents (OTAs) and booking portals, there are so far no signs of these having any significant impact on operator bottom lines.

4.68%

China

2.05%

France

1.85%

Germany

-3.05%

Norway

-3.67%

Sweden

Note: Copenhagen bednights by guest origin. CAGR 2013-2016.

Source: Statistics Denmark

In terms of business-related demand, the outlook for hotels in the MICE segment 1 is bright too.

Denmark tops the World Bank’s “Ease of doing business index”.

Unemployment is low and economic growth accelerating. Rising employment levels are correlated with mounting business activity, increasing business-related hotel demand.

Copenhagen is widely recognised as a strong conference city. In fact, the city has been named the world’s best performing city for meetings and conferences 2 .

Substantial capacity growth predicted to boost supply Favourable market conditions have made many established hotel chains expand operations. By the same token, several international chains are looking to enter the Copenhagen market. As a result, the market has a substantial pipeline that will dramatically increase supply within the next three or four years. According to Statistics Denmark, Copenhagen proper today offers some 15,700 hotel rooms in total. Factoring in the number of rooms in the pipeline, this corresponds to an increase in supply of some 80% from 2009 to 2020. Held up against the projected 84% growth in demand in 2009-2019, supply seems to largely match and meet recent years’ accumulated market demand.

1 MICE = Meetings, Incentives, Conferences and Exhibitions.

2 Source: Air Travel Intelligence Company OAG, January 2016.